Establishing Strong Industrial services growth
Key players in the industrial services market are faced with a range of diverse issues in a rapidly changing environment. From underlying market growth challenges to evolving competitive landscapes to disruptive service offerings or technologies, industrial services players are being forced to evaluate their current market positions and growth strategies to position themselves in the future.
In recent years, input prices have fallen and the growth of emerging industrial services markets has slowed, decreasing new equipment sales in industries ranging from oil and gas to agriculture to commercial aerospace. For industrial services manufacturers, capturing organic growth through new product development can be slow, costly, and risky- as necessary as long term innovation may be.
With 15 years of experience, our client is in the industrial services in designing, manufacturing, and providing precision machinery. The current bulk of customers are from the automobile, electronic, and communication industries. The company now offers a range of products mix and employs a staff of 500.
For organizations to remain competitive, they must think about the value chain from beginning to end, through all aspects of production. With all the concepts and theories for leaders to think about it is often daunting to think about the actions necessary to make change happen.
Manufacturers must bring everything they know about transformation to bear and then. They are having to rethink almost every aspect of the way they do business from what customers want and how offerings should be sold and serviced.
It had been a usual scene that there was a cluster of personnel going to the CEO’s office and they were gone the next day. This trend went on and on. Staff felt very insecure and there was high staff turnover. Business development directors dreaded daily sales meetings with no updates on new leads or business pipelines. They were counting the days to receive their paychecks and wondering when it would be their turn to see the CEO.
Adam Morris knew these scenes were the signs of financial woes. Lots of cash had been pumped into raw materials and work in progress items to finished goods. That’s why he knew his company had a big problem on its hands. As Morris points out “Suppliers keep bugging me for payment and threatened to stop the usual supply when the finished good should be scheduled for next week. This is really bad facing both customers and suppliers”
Demand volatility was causing issues for planning as it was challenging to trigger new orders because Morris and his team could not make accurate demand forecasts.
Disruptive change is creating new requirements in our vision and parameters.
To overcome these hurdles, Morris and his industrial services team needed a growth solution that would help them present their high-quality products in a simple engaging way. The stakes were high, without better presentations, sales would fall far short and jeopardize. He needed to cut costs by looking at the bad performers to axe them. Movements at the CEO’s office had been very frequent. Staff went there never came to the office again. There was no notice sent to the staff and wild speculations all over the place. Not a single idea on what was happening in the office, the best business development personnel tendered taking away a few major revenue sources.
For the company’s long-term growth success. Morris began to search for a reliable business growth strategy firm with a powerful customized plan that would have an immediate impact on the company.
After looking at the value cost analysis, Morris selected Crestpoint Consulting for the deep track records with fast growth results in battling the numerous teething issues in his industrial services company. Without any further delays, Crestpoint Consulting kick-started the industrial services firm’s overall view analysis and identified key growth ideas. Manufacturers already know these customers, yet their sales forces may lack the scale to prioritize likely buyers. Morris now knows the figures to quantify the propensity for the industrial services sales and segmentation of his customers.
Morris was stumped by this one question. Are we making enough to cover the fixed cost and budgeted expenditure? He was very disappointed after receiving the first growth report from Crestpoint Consulting. The products have not performed well financially. The sales cannot cover the product costs and staff salaries. The salespeople made deals that were not to the company’s interest but only to get more sales commission. The operations were not properly optimized at the manufacturing lines with excess resources unutilized.
The client received a clear and detailed understanding of the productivity improvements, including an optimized field management organization that reduced resources, decreased nonlabor costs, and aligned functional, geographical, and end-customer needs of the company.
No one realizes that products for aerospace have lesser demand. After having surveys and chats with customers as suggested by Crestpoint Consulting. Things have taken a change in the customers’ demand due to the change in their own strategic growth plan. After researching these new industrial services areas as these new demands in the findings, Morris was thrilled to know there are untapped growth sources of income based on their own work and expertise. His company can dive automotive, telecommunications, and electronics products with good profit margins.
Morris stopped all loss-making products and moved on to potential customer bases after he has received a market opportunity growth assessment from Crestpoint Consulting on the industrial services sector. The growth expert has developed a detailed integration plan to execute and track the successful completion of the above-mentioned recommendations. He was able to increase the sales volume generated, hitting a net profit margin at 45% to sales.
There is no more heavy reliance on a few major customers and sales staff are made to sign a redrafted employment contract with an added non-competition clause to safeguard the company’s interest. Sales representatives are only awarded the high commission for deals hitting the targeted profit margins. Everyone is now very happy. The industrial services firm has profitably generated double-digit sales growth made a big switch in product mix with Crestpoint Consulting.
Industrial companies that understand their customer base, adequately prioritize aftermarket sales, and relentlessly focus on execution can boost their service revenue by 30% to 36% within 3-5 years without requiring large investments in new product development or cost reduction programs. Moreover, this growth directly feeds cash flow and tends to be stables through business cycles. And it can be quickly monetized within just weeks. The financial rewards can be significant.
Morris personally contacted all major customers himself to lock in long working relationships of paramount importance. The staff is kept updated on the current issue and happenings. They are incentivized with the high payout for excellent ideas implemented that helped the company. Optimal resource allocations are achieved at each product line. Morris and the team can now deploy interventions when needed, conduct effective performance management meetings, adapt daily plans to meet customers’ demands, and to improve labor productivity as well as operational efficiency. He can now make quick short-term pivots to restart operations and ramp up production while considering resource availability and demand fluctuations. Now more strategic changes are made to build resilience and enhance efficiency.
Crestpoint Consulting hasn’t just helped Morris to earn steady high-profit results but created the life he wants and stress-free to work on his own dreams.
About Crestpoint Consulting
We help organizations to significantly boost both productivity and effectiveness of core processes. Crestpoint Consulting guides clients through the design and implementation of operational strategies that will stand the test of time while creating agility and product portfolio that is commercially and operationally optimized.
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